Is Blackrock TCP Capital Corp. overvalued or undervalued?

As of 7 August 2024, the valuation grade for Blackrock TCP Capital Corp. has moved from very attractive to risky, indicating a significant shift in its financial outlook. The company is currently considered overvalued, as evidenced by its Price to Book Value of 0.85 and an EV to Capital Employed ratio of 0.83, which suggest that the market may not be pricing in the risks adequately. Additionally, the company's ROCE stands at a low 4.21%, while its ROE is negative at -6.05%, further highlighting its financial struggles compared to peers.
In the peer comparison, Blackrock TCP Capital Corp. has a P/E ratio of -51.75, contrasting sharply with its peer's EV to EBITDA of 8.30, which underscores its underperformance. The company's dividend yield of 12.25% may attract some investors, but the overall financial metrics point to a concerning valuation. Over the past year, Blackrock TCP Capital Corp. has underperformed the S&P 500, with a return of -21.58% compared to the index's 17.14%, reinforcing the notion that the stock is not a favorable investment at this time.